Most costs you spend purely for running your business are deductible - but not costs that are capital in nature (buying long-term assets), personal costs, or costs of earning tax-exempt income.
Expenditure incurred wholly and exclusively for the business and not capital in nature is deductible in the period incurred, subject to apportionment where it serves more than one purpose (Article 28(1) and (3)).
No deduction is allowed for expenditure not for the business, expenditure incurred in deriving Exempt Income, unconnected losses, or expenditure specified by Cabinet decision as non-deductible (Article 28(2)).
Where deductibility under Chapter Nine depends on conditions being met, expenditure failing those conditions is not deductible, and capital expenditure is deductible only on realisation of the related asset/liability, unless a specific Chapter Nine rule applies, such as depreciation (Ministerial Decision No. 134 of 2023, Article 7).
Only half of what you spend entertaining clients can be deducted for Corporate Tax - things like meals, hotel stays, transport, tickets and event facilities. Keep records showing the expense was for business, not personal, entertainment.
Article 32(1)-(2) of the Corporate Tax Law allows a 50% deduction for entertainment expenditure incurred on customers, shareholders, suppliers or business partners, covering meals, accommodation, transportation, admission fees and related facilities.
Article 28 requires expenditure to be incurred wholly and exclusively for Business purposes, with an apportionment required where expenditure serves more than one purpose.
FTA guidance explains that the 50% rule applies to all entertainment expenditure because the private element is hard to estimate, but any clearly personal (non-business) use must be identified and apportioned out first, with only the business-purpose portion subject to the 50% restriction. Based on FTA guidance
Yes, staff entertainment (like staff parties or team-building events) can usually be fully deducted, not just half. It only gets blocked if the event is really private, like a family wedding for staff who happen to work for you.
Article 28 allows deduction of expenditure incurred wholly and exclusively for the business, excluding expenditure not for business purposes.
Article 32 restricts deduction to 50% only for entertainment, amusement or recreation expenditure for customers, shareholders, suppliers or other business partners.
FTA guidance treats genuine employee entertainment (staff parties, off-site events, team-building) as employee-related expenditure fully deductible under Article 28, not subject to the 50% cap, unless the event is private in nature. Based on FTA guidance
No, fines and penalties are not deductible for Corporate Tax. The only exception is when the amount is really compensation you paid for damages or breaking a contract, not a punishment.
Article 33(2) of the Corporate Tax Law disallows deduction of fines and penalties, other than amounts awarded as compensation for damages or breach of contract.
FTA guidance explains that any payment imposed as punishment for infraction of laws, rules or regulations, including by a statutory body or government, is not deductible even if incurred in the ordinary course of business. Based on FTA guidance
No, not unless the donation goes to an officially registered 'Qualifying Public Benefit Entity'. Donations to any other charity or organisation cannot be deducted from your taxable profit.
Article 33(1) of Federal Decree-Law No. 47 of 2022 disallows deduction of donations, grants or gifts made to any entity that is not a Qualifying Public Benefit Entity.
Where Small Business Relief is elected under Article 21, the deduction rules of Chapter Nine (including this restriction) do not apply, so donations have no tax effect either way.
No. Corporate Tax that you pay is not a deductible business expense when working out your taxable profit.
Deductible expenditure must be incurred wholly and exclusively for the Taxable Person's Business and not be capital in nature, subject to specific exclusions.
FTA guidance confirms that Corporate Tax imposed on the taxpayer (per Article 33(6) of the Corporate Tax Law) must be treated as non-deductible when preparing the tax return. Based on FTA guidance
It depends: if the payment is really an owner's share of profit or a withdrawal from the business, it's not deductible. But if the owner is genuinely employed (e.g. a shareholder-director with an employment contract, paid at market salary for real work done), that salary can be deducted as a normal business expense.
Expenditure incurred wholly and exclusively for the business, and not capital in nature, is deductible in the period incurred.
Dividends, profit distributions or similar benefits paid to an owner, and amounts withdrawn from the business by certain natural person Taxable Persons or partners, are specifically non-deductible.
FTA guidance confirms that salary paid to a shareholder-director acting genuinely as an employee, at arm's length, is deductible, whereas a partner's salary in a fiscally opaque unincorporated partnership is treated as a non-deductible profit distribution. Based on FTA guidance
No - simply setting aside a provision for a doubtful debt isn't enough. You can only deduct or adjust the tax once the debt has actually been written off in your accounts as uncollectable, not while it's just a provision.
Corporate Tax: a bad debt expense is deductible when written off in accordance with the relevant accounting standards and it meets the deductibility requirements of the Corporate Tax Law; if later recovered, the recovery is taxable. Based on FTA guidance
VAT: Output Tax may only be reduced where consideration has been written off in full or part as a bad debt in the supplier's accounts, more than 6 months have passed since the supply, tax was charged and paid, and the recipient has been notified.
The GCC VAT Agreement permits adjustment of tax value for total or partial non-collection of consideration, subject to each Member State's bad debt conditions.
Guidance only, not tax advice. Answers were drafted by TI from the FTA’s published law and last updated on 25 September 2026; rely on the official text and a registered tax agent before you file.